Facing shrinking margins and high gasoline demand, refiners are struggling to cover the costs to comply with this year’s Renewable Fuel Standard, Platts reports. Gasoline consumption is on track to reach a record high this year, but demand growth has been eclipsed by supply growth. Refiners are required to buy Renewable Identification Numbers (RIN) to meet their RFS requirements, in addition to blending renewables fuels into the gasoline they produce.
Platts notes the example of Delek USA, which said in its first quarter SEC filing it could not recover its RIN costs if refined products prices sunk too low. The price of USGC 87 unleaded gasoline — a product Delek blends with biofuel — averaged $1.42 per gallon during the second quarter. Platts estimates Delek’s cost just to blend ethanol into the fuel is $1.40 per gallon. The company paid as much as 78 cents per RIN in the first quarter.
Earlier this week Reuters columnist John Kemp noted that U.S. refiners are focusing more on distillate production amid the gasoline glut that was built up in the first half of this year.
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